Repost: Dr. Frank Musmar, "US Aid to Israel Is a High-Yield Investment"
For years, I’ve wanted to write an analysis countering the claim that “Israel—the one Jewish state—is stealing our taxes.” My belief is that the truth is the inverse: Israel likely provides more value back to the United States than critics ever consider. What I want is data that could prove or disprove this hypothesis.
The reality is, such a study has never been done on a large scale. I don’t know what the results would be. Israel may well give back more than it receives, or it may take more than it gives. Even if a study is completed, it needs to be made alongside deeper, opinionated questions: Does Israel serve as a stronger ally to the U.S. than the next major aid recipients? Do Israeli tech and medical inventions shape modern life in ways that can’t easily be quantified? What is the role of military strength in sustaining the USD, a fiat currency? These are rarely asked, yet essential, questions.
My initial hope was to tackle this either as a long-form (20+ page) analysis for an academic journal or a shorter (2–4 page) analysis for Calcalist, Israel’s leading financial newspaper. I even tried to bring in a few friends, but after months of false starts I decided to pursue it alone. Along the way, I came across the article I’m sharing here, which offers a strong starting point. Note, it’s from 2020, so well before the current war.
It’s important to acknowledge why such a project is nearly impossible to complete fully. Much of the relevant data isn’t public, and the information that is available is tangled in controversy. For example: if the U.S. offsets the enormous disposal costs of munitions by transferring them to Israel, should that be counted as savings? Do we also weigh the environmental costs of disposal avoided? If military aid improves U.S. stockpiles, how long do those benefits last—and how do we measure them?
And of course, any data would be dismissed with the usual refrain that Israel must be stealing, that “everyone knows” it, and so on. The Tucker Carlsons and Candace Owenses, the Bernie Sanderses and Rashida Tlaibs of the world rarely have much to say about other states benefiting from U.S. aid. They rail against AIPAC but stay silent on Qatar. A study like this would be useful for the data-minded, but in the bigger picture it would change little. When it comes to scapegoats, Jews remain the easiest target, whether paired with Israel or not.
These questions are messy and often unanswerable. But that, in itself, reveals something: the simplistic claim that “Israel steals U.S. taxes” rests on neither serious economics nor serious ethics.
Here is one article that challenges that bigoted trope, written by Dr. Musmar: https://besacenter.org/us-aid-israel-investment/
It was published by the Begin-Sadat Center for Strategic Studies (BESA) at Bar-Ilan University. I do not have permission to repost it here, but according to their site, “BESA Center publications and policy recommendations are directed towards senior Israeli decision-makers in military and civilian life, the defense and foreign affairs establishments in Israel and abroad, the diplomatic corps, the press, the academic community, leaders of Jewish communities around the world, and the educated public.”
photo via Wikipedia
US Aid to Israel Is a High-Yield Investment
Dr. Frank Musmar; May 24, 2020
BESA Center Perspectives Paper No. 1,578, May 24, 2020
EXECUTIVE SUMMARY: America and Israel face numerous shared challenges, including terrorism, weapons and nuclear proliferation, cyber warfare, and the spread of radical Islamist ideology. America can consistently depend on the beacon of stability represented by democratic Israel in the turbulent Middle East, where the two countries share the same national and homeland security concerns: the megalomaniacal vision of Iran’s ayatollahs, the threat of Sunni and Shiite Islamic terrorism, and the critical security requirements of vulnerable pro-US Arab regimes. Israel also invests heavily in the American economy and is one of the top 20 suppliers of direct investment in the US.
The US and Israel have a mutually beneficial relationship that provides America with a high return on its annual $3.8 billion investment. Between 1985, when the US and Israel signed a Free Trade Agreement, and 2016, trade between the countries increased tenfold to $49 billion. The agreement was successful in three dimensions: politically, economically, and strategically. Israel now invests close to $24 billion in the US, nearly triple the figure of a decade earlier. Strategically, Israel is an American beachhead in the Middle East and the only regional ally on which Washington can rely.
Israel’s relationship with Saudi Arabia and other Arab Gulf states has improved dramatically in the recent past, irrespective of the Palestinian issue. Because of this new warmth, the US does not have to choose between strategic cooperation with Jerusalem versus Riyadh. US-Israel and US-Arab relations complement one another, and that synergy works to Washington’s benefit.
On the economic front, critical components of leading American high-tech products are invented and designed in Israel, making the American companies that manufacture those products more competitive and profitable. Cisco, Intel, Motorola, Applied Materials, and HP are just a few examples. The US-Israeli economic and commercial relationship now encompasses IT, biotech, life sciences, health care solutions, energy, pharmaceuticals, food and beverages, defense industries, cyber-security, aviation, desalination, recycling, conservation, management, and irrigation.
US firms established two-thirds of the 300 foreign-invested research and development centers in Israel at Start-Up Nation (an independent non-profit that builds bridges to Israeli innovation firms). Israeli firms represent the second-largest source of foreign listings on the NASDAQ after China, and more than Indian, Japanese, and South Korean firms combined. According to an estimate by the US Chamber of Commerce, Israel is home to more than 2,500 American firms employing some 72,000 Israelis.
The US and Israel have three joint research & development foundations: the Binational Industrial Research and Development Foundation (BIRD), the Binational Science Foundation (BSF), and the Binational Agricultural Research and Development Foundation (BARD). Since its inception in 1977, the BIRD Foundation has granted $282 million to 813 projects that have directly and indirectly generated $8 billion in sales.
Israeli businesses invest heavily in the US economy, with Israel placing among the top 20 suppliers of direct investment in the US. More than $150 billion was invested by Israeli companies in the US between 2010 and 2015 (more than $25.1 billion in 2015 alone). As of this writing, over 30 US states have signed bilateral agreements with Israel to foster closer ties in fields like business, technology, agriculture, homeland security, and energy.
Strategically, the US and Israel have developed deep strategic ties to confront common threats. This strategic relationship is a crucial pillar of America’s Middle East security framework, and the partnership is continually growing and expanding into new areas. Both nations gain from a strong strategic partnership, which draws in part upon Israel’s capabilities in designing advanced military, homeland security, counterterrorism, and cyber-protection technologies that help the US meet its growing security challenges. Israel’s military strength and central geostrategic location provide a strong deterrent to regional actors opposed to the US.
Israel is the place where US special operations units trained before deployment in Iraq and Afghanistan, and Israeli armor plating technology protects US soldiers. Israel is a cost-effective, battle-tested laboratory for US defense industries, and it provides the US with more intelligence than all the NATO countries put together. American battle tactics are formulated according to the Israeli playbook.
Israel is a strategic beachhead of the US in the Middle East. It is in effect the largest US aircraft carrier, yet it does not require a single American boot on the ground. Israel is the only stable, reliable, capable, democratic, and unconditional ally of the US, and it is willing to flex its muscles.
Dr. Frank Musmar is a financial and performance management specialist and a non-resident research associate at the BESA Center.
Comment your thoughts. And if you’d like to participate in a much more data driven analysis of what Israel takes and gives to the US, feel free to reach out!
